Stores Formats

8/7/2019 Stores Formats

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Retail Institutions by Ownership

RETAIL

MANAGEMENT:

A STRATEGIC

APPROACH


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A Classification Method for Retail

Institutions

I

Ownership

IINonstore-based

Retail Strategy Mix

IIIStructural Arrangements in

Retailers-Wholesalers


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Ownership Forms Independent

Chain

Franchise

Leased department

Consumer cooperative


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Independent Retailers Dominant retailers

More than 50% of these are run by owners

and their families

Why so many? Ease of entry


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Independent retailers throng promotional business

According to latest report by AdEx on advertising volumes for

period from January-October 2008, 59% of retail sector

advertisement in the print medium was by independent retailers.

A lot of new advertisers also join the publicity market amongthem a new independent retailer Emmanuval Silks topped the

new advertisers list for Jan-Oct 08.

Promotional advertising was not restricted to the big cities alone,

almost 51% of retail advertising was done in non- metro

newspapers, 14% in mini-metros and 35% in the metros.

Of the type of advertisements done - sales promotional

campaigns constituted 48% of total ads of retail sector in Print

during Jan-Oct 08.


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Competitive State of IndependentsAdvantages

Flexibility in formats,locations, and strategy

Control over investmentcosts and personnelfunctions, strategies

Personal image

Consistency and

independence Strong entrepreneurial

leadership

Disadvantages

Lack of bargainingpower

Lack of economies ofscale

Labor intensiveoperations

Over-dependence on

owner Limited long-run

planning


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Store-based Retail Strategy Mix

Convenience store

Conventional

supermarket Food-based

superstore

Combination store

Warehouse store Specialty store

Variety store

Traditional

department store Full-line discount

store

Off-price chain

Factory outlet


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Chain Retailers Operates multiple outlets under common

ownership

Engages in some level of centralized orcoordinated purchasing and decision

making

Eg: Reliance Fresh, Spencer's Daily, etc


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Reliance Fresh


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Franchising A contractual agreement between a

franchisor and a retail franchisee, which

allows the franchisee to conduct businessunder an established name and according

to a given pattern of business

Franchisee pays an initial fee and a monthly

percentage of gross sales in exchange forthe exclusive rights to sell goods and

services in an area


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Franchise FormatsProduct/ Trademark

franchisee acquires the

identity of a franchisor by

agreeing to sell productsand/or operate under the

franchisor name

franchisee operates

autonomously

2/3 of retail franchisingsales

Business Format

franchisee receives

assistance: location,quality control,

accounting systems,

start-up practices,

management training

common forrestaurants, real

estate


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Business Qualifications Sought by McDonalds for

Potential Franchisees

Personal Integrity

Willingness to

complete training

Financial

resources

Willingness to

devote time

Ability to manage

finances

Ability to motivate

and train

Entrepreneurial

SpiritIdeal

Franchisee


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Types of Pure Wholesalers Mill Supply Wholesalers

Single line Wholesalers.

Complete line Wholesalers.


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Franchising

"Franchising is a form of commercial cooperation. The Franchisor grants a party

the rights to use a business and marketing system in order to cause a trademarkto be more readily recognized by the public. The Franchisor grants the rights in

order to guarantee the use of a uniform business system for the presentation of

products and services to consumers. In exchange for the right to use the trademark

and the system, the franchisee pays fees to the Franchisor in the form of an initial

license fee and an ongoing royalty fee.

More than a method of distribution, franchising is a way for the Franchisor to derive

financial benefit from its expertise without investing its own capital in thefranchisee's business. A franchise relationship differs from a distribution or

dealership arrangement when the agreement involves the use of a single business

name, the use of uniform business methods including a prescribed marketing

program, and the payment of royalties in exchange for benefits granted by the

Franchisor.

The major difference between a business organization and a franchised

organization is the realization that the Franchisor and the franchisee are

interdependent and that one cannot succeed without the other. They are

symbiotically interrelated, mutually related, strategically allied, and involved in an

exchange relationship. Each is independent of each other, yet intrinsically linked to

the business network. The Franchisor is responsible for managing groups ofpeople coming together in order to form economies of scale: 2+2=10. Economies

of scale develop from mutually shared vision and everyone marching to the same

drummer. Mutually shared vision and uniformity in a system results from trust

which evolves from effective communication".


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Competitive State of Franchising

Advantages

small capital required

acquire well-known

names operating/management

skills taught

cooperative marketing

possible

exclusive selling rights

less costly per unit

Disadvantages oversaturation could

occur

franchisors mayoverstate potential

locked into contracts

agreements may becancelled or voided

royalties are basedon sales, not profits


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From the Franchisors Perspective

Benefits

national or global

presence possible

qualifications for

franchisee/ operations

are set and enforced

money obtained at

delivery royalties represent

revenue stream

Potential Problems potential for harm to

reputation

lack of uniformity mayaffect customer loyalty

ineffective franchisedunits may damageresale value,

profitability potential limits to

franchisor rules


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Leased Departments A leased department is a department in a

retail store that is rented to an outside party

The proprietor is responsible for allaspects of its business and pays a

percentage of sales as rent

The department store sets operating

restrictions to ensure consistency and

coordination


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Nonstore-based Retail Strategy

Mix and Nontraditional Retailing

Direct marketing

Vending machine

World Wide Web

Other emerging retail formats


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Eureka Forbes

Eureka Forbes (EFL) have come a long way. From being famous for

pioneering the direct marketing in India to being rated as the best

employer and top it all a case study at Harvard.

Eureka Forbes is a joint venture between Forbes ( India ) and

Electrolux from Sweden.


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Vending Machines

Aromas N Blends private limited offers a unique double option digitalmachine. Double option digital machines dispenses two beverages of your

choice .Also offer a choice of strong-medium-light options and half and full

cup options of the beverage being dispensed. Suited for large offices where

there is a need to cater to the different preferences of people. The water tank

capacity of this machine is 8litres.


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E-Stores


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Structural Arrangements in

Retailers-Wholesalers

Types of Wholesalers based on the exact

nature of role in the distribution channel:

>>Manufacturer-Wholesaler.

>> Retailer-Wholesaler.

>> WholesalerProper orPure

Wholesaler.


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Manufacturer-Wholesaler engage in the

manufacturing activities to a limited extent.

However, they also sell products of other

manufacturers along their own.

Retailer-Wholesaler wholesalers combine the twin

roles of retailers & wholesalers. They supply goods

to other wholesalers as well as also sell the goods

in their own retail outlet. Contd


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Pure wholesalers concentrate entirely on

the function of buying & selling in large lots

and do not engage in manufacturing orretailing activities.

They are also called distributors.

They maintain warehouses.

Some have their own transport

arrangements.


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Incentive forPure Wholesalers

Pure wholesalers rely on the following for

their profits:

Trade Discount.

Rebate.

Cash Discounts.


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Types of Pure Wholesalers Mill Supply Wholesalers

Single line Wholesalers.

Complete line Wholesalers.


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Mill Supply Wholesalers:

They sell a variety of goods required by themanufacturer or mills for the production of

consumer goods for the market.


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Mill Supply Wholesalers Meet the material requirements of the

production departments.

Trained and operational salesforce. OPerations often geographically

widespread.

Wide range of products. Boon to particularly small producers

because of the offer of goods on credit.


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Single Line Wholesalers.These wholesalers deal with different varieties

in a particular line of goods to many type of

buyers of such goods.


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Examples of Single Line

Wholesalers.

Paper wholesaler deals cardboards, books,

etc.

Electrical goods wholesaler deals with

bulbs, wires, plugs, switches, meters,etc.

Computer Stationary wholesaler may bestocking motherboards, monitors,

keyboards, speakers, etc.


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Utility of Single Line Wholesalers.

All items of a variety are available at one

place for the retailers.

Time, Costs & Efforts are thus reduced.


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Complete Line Wholesalers The complete line of goods required by a

particular industry or trade may be offered

for sale by the Complete Line Wholesalers.


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Example of Complete Line

Wholesalers

Hospital supply wholesaler may supply all

types of surgical aids / radiographical /

pathological instruments.


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Thank You

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Stores Formats